Facing shocks through greater integration

RCEP also offers its members the benefits that can come from greater regional integration. The Covid-19 pandemic proves once again that collaboration across borders is essential.

The negative economic impact of the pandemic was expected. What was less expected was the increasing inward-looking policies adopted by RCEP members.

Take, for example, the policies around personal protective equipment (PPE), from masks to hand sanitizers. As anticipated, lockdowns stifled economic activity and disrupted supply chains. Restrictions in China, a critical supplier of PPE, led to supply shocks in countries around the world.[6] Many governments also adopted similar emergency policies such as restricting exports of PPE, medical goods, and food products. As trade partners retaliated, price hikes and volatility ensued, as did supply shortages.

Non-tariff measures (NTMs) proliferated during the pandemic. From February 2020 to October 2020, 66 trade measures were implemented by RCEP countries; 35 measures were classified as restrictive (see Fig. 1).[7] From a list of 24 export restrictive measures, 19 were export prohibitions. The number of notifications for NTMs peaked in April 2020 (see Fig. 2).

It should be noted that 21 out of 30 of the liberalization import measures were tariff reductions.

Thus, despite high demand, reducing tariffs on PPE products did not attract more imports. The adoption of export prohibition measures ensured that enough PPE were available domestically.

Another widely adopted restriction was the import ban. To curb the spread of the virus, import bans were also imposed by countries with restrictive sanitary and phytosanitary (SPS) regulations. Predictably, wild animals from China accounted for most of the banned products. The Republic of Korea (ROK) imposed the highest number of import bans, all on wild and live animals (see Fig. 3).

type of restrictive measures imposed by RCEP members to covid 19 goods